BulldogTom Posted January 8, 2011 Report Share Posted January 8, 2011 OK, so I get my first phone call asking a "quick question" for 2010. Background: Client lost his wife last year and moved into a rest home. In order to get his VA benefits, he gave his two homes, one a rental, to his daughters. Title was transfered at the county recorder. Not sure what the value of the houses are. The rental only has a basis of 24K and was their home for many years until the spouse got sick. The other was a purchase a couple years ago to make it easier for him to care for his wife. Question: In 2010, is there still a unified credit for gifts? Are the rules the same as they always were that you can use the unified credit to offset the gift tax? Or did anything change in gift taxes when the estate tax went away for last year? Thanks in advance. I don't do many gift tax returns (because most of my clients don't have a lot of money). Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
Pacun Posted January 8, 2011 Report Share Posted January 8, 2011 The rules are the same. You can exclude 13K per donee and then you use the unified credit. If he dies soon, his estate might need to pull back those houses. I know you were clear on your question that the gifts were made after his wife passed away, but the question below is interesting and related. Question: Your client’s husband Henry passed away earlier this year. She has not remarried, and wishes to gift substantial amounts to her children before year end. No gifts were made by either spouse prior to Henry’s death. Can she use the gift splitting rules to treat the gifts as made half by herself and half by her deceased husband, in order to double the annual exclusion and applicable credit amount available for 2010? Answer: No. For purposes of the gift splitting rules, an individual is considered to be the spouse of another only if [§2513(a)(1)]: He (or she) is married to that other person at the time of the gift; and Doesn't remarry during the remainder of the calendar year. Thus, there is no splitting of gifts between persons who weren't married to each other when the gift was made. For example, gifts made by husband or wife during that part of the year in which they aren't married, or in which the donor's spouse is deceased, may not be split [Reg. §25.2513-1((1); Rev Rul. 55-506]. Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 8, 2011 Author Report Share Posted January 8, 2011 I knew about the gift splitting. Looks like 1 million exemption in 2010 if what I am reading is correct. 35% rate. Tom Lodi, CA Quote Link to comment Share on other sites More sharing options...
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